FTSE 100 stocks ended on a high on Tuesday after rangebound trading for much of the session, with engineers leading light gains.
The market has dithered with higher levels on account of an almost vigil on Wall Street ahead of US President Donald Trump’s key speech to Congress which kicks off at 2110 ET (0210 GMT Wednesday).
Some see the speech as a mini State of the Union on the first five weeks of the new administration, but investors are hungry for details on tax and regulation reform and plans to boost infrastructure spending.
The blue-chip FTSE 100 ended up 0.14% at 7263 and led by Engineering services company Babcock International Group (LON:BAB), up 7.1% to 948p. The firm said it had traded in line with expectations. Its full-year outlook remained unchanged. Sometimes in line is enough to excite investors.
The second top riser in the FTSE 100 was engineer GKN (LON:GKN), up 4.9% to 359.9p, after it recorded a 12% jump in full-year pre-tax profit as sales rose and the company expressed confidence over its prospects for 2017.
Investors were also digesting the latest survey from GfK, which showed UK consumer confidence fell in February. GfK's monthly consumer sentiment index nudged down to -6 from -5 in January, in line with expectations.
The mid-cap FTSE 250 index advanced by 0.5% to 18,770 and led by Meggitt (LON:MGGT) up 13.1% to 470.5p. The Dorset-based engineer also said the long-term outlook for defence markets was "positive" although management remained cautious on the company's prospects for 2017 specifically, "reflecting expected delays to cash flowing to suppliers from the improved budgets, especially given the Continuing Resolution and change of administration in the US. We therefore anticipate organic revenue growth in 2017 of 1 to 3%."
During the previous session US President Trump promised a "historic" ramp-up in his country's spending on defence.
Among small-cap stocks, the FTSE AIM 100 Index was flat at 4361 and the FTSE AIM All-Share Index down 0.14% to 907.
London gainers were 30% versus 37% of stocks falling.
Late session
For about 30 seconds this afternoon, the FTSE 100 kicked into life and that supposedly unbreakable range I touched on earlier was breached.
Unfortunately, it didn’t last very long at all and the blue chip index slipped back in between the 7,248 and 7,262 range it has been trading for *nearly* all of today.
It has mustered some steam this afternoon though, and is currently up 7 points to 7,260 points.
As you’re probably well aware of by now, Donald Trump is addressing Congress later on this evening (well, 2am UK time) and the markets have been in limbo all day seemingly waiting for that.
Traders are hoping that Trump will give a little more colour to his already colourful remarks since taking office.
He’s spoken of a massive infrastructure splurge as well as increasing the US’s defence spend, although no firm policies have been put in place as of yet. That’s what the markets will be keeping a keen eye on later tonight.
Away from Trump, Babcock International Group PLC (LON:BAB) shares jumped 7% to £9.44, making it the biggest riser on the FTSE 100 this afternoon.
The British engineering and outsourcing company was buoyed after it confirmed it was on track to hit full-year expectations, despite industry-wide delays due to uncertainty surrounding Brexit.
Pets at Home Group PLC (LON:PETS) gave up its earlier gains this afternoon after the pets store was forced to recall a product it sold.
Three cats “exhibited symptoms of sudden collapse, fitting, widespread twitching and general uneasiness” after consuming AVA-branded biscuits.
Despite trading higher for most of the day, Pets at Home looked set to finish the day below yesterday’s close, with the share price losing 1% to 182.8p shortly before the end of play.
Away from companies, one of the biggest news stories on Tuesday was that Sir Philip Green reached a deal with the Pensions Regulator to plug the gap in the BHS pension scheme.
It’s been an ongoing drama since the UK retailer collapsed last year, and today’s agreement will see the billionaire ex-BHS owner prop up the company’s pension fund with £363mln of his own cash.
Its good news for former employees, who will now get the same starting pension they were originally promised.
As bashful as ever, Green said: “I have today made a voluntary contribution of up to £363mln to enable the trustees of the BHS Pension schemes to achieve a significantly better outcome than the schemes entering the Pension Protection Fund (PPF).”
1.15pm...FTSE 100 continues to mark time as all eyes turn to The Donald
It’s been a fairly uneventful day so far for the FTSE 100. The blue chip index has traded within a tight range between 7,248 and 7,262 all day, and it doesn’t really look like breaking that trend any time soon.
It’s currently up 5 points to 7,257 as most of the City heads to lunch, seemingly marking time as traders and investors wait to hear what Donald Trump has to say when he addresses Congress for the first time later tonight.
GKN plc (LON:GKN) was one of the top risers on the blue chip index as the markets headed into the afternoon session, up almost 7% to 365.6p.
The British engineering group posted a 12% increase in full-year adjusted pre-tax profits, driven by organic sales growth in its auto businesses.
After a bullish note from City broker Jefferies, Marks and Spencer Group Plc (LON:MKS) consolidated its early gains to trade 2% higher at 336.2p.
Jefferies upgraded the retailer to a ‘buy’ from ‘underperform’ and also moved its price target for the stock to £3.70 from £2.50.
The broker praised M&S’s strategy plans to cut overseas losses and improve its ailing clothing division.
“M&S is now our preferred stock to own among the UK clothing retailers,” said the broker in a note to clients this morning.
“Offering a 6.5% dividend yield and improving sales momentum we see an opportunity to buy into the five year, admittedly back end loaded, strategy at an attractive valuation.”
The miners were still languishing towards the bottom of the fallers ahead of Trump’s highly-anticipated speech.
London Stock Exchange Group Plc (LON:LSE) also gave up some early gains to head into the afternoon 1% down at £30.65.
That follows on from yesterday’s share price dip after it suggested that its merger with Deutsche Boerse may not go through after all.
High street baker Greggs plc (LON:GRG) also suffered at the hands of investors earlier this morning and was down more than 3% despite posting a rise in sales and profits, after it warned that the UK consumer outlook is “more challenging” than before.
Outside of the UK, there was an unexpected boost for the Indian economy, after data showed the country’s GDP grew by 7% in the final quarter of 2016, despite the whole demonetisation saga.
Indian government expects the economy to grow by 7.1% in FY 2016-17 (April 16 -Mar 17).That means demonetization didn't have a major impact?
— Sameer Hashmi (@sameerhashmi) February 28, 2017
Most polls (are these still a thing after Brexit, Trump etc.?) had forecast growth of between 6% and 6.5%.
10.15am...FTSE 100 treads water as markets wait for Trump
The FTSE 100 was treading water halfway through the morning trading session. That said, it was just about managing to keep its head above the surface and was up a colossal 2 points – or 0.03% if you’re really interested – to 7,255 at around 10.15am.
The market's attention seems to be on Donald Trump’s first address to Congress which will take place very early tomorrow morning at around 2am UK time.
Miners – which have made strong gains in the weeks and months since Trump’s election on the back of proposed increases in infrastructure spending – weren’t quite so confident this morning.
The likes of Antofagasta PLC (LON:ANTO), Fresnillio PLC (LON:FRES), BHP Billiton plc (LON:BLT) and Randgold Resources PLC (LON:RRS) were all weighing heavily on the FTSE.
In recent weeks there has been talk of a massive US$500mln investment from the Trump administration into US infrastructure, while he’s also talked about ‘phenomenal’ corporate tax cuts.
Still, traders were perhaps following the ‘buy-on-the-rumour, sell-on-the-fact’ theory ahead of the speech during which miners will be hoping he firms up some of those ideas.
While mining investors were holding their breath in anticipation of Trump’s speech, UK engineer Meggitt plc (LON:MGGT) gained more than 10% after telling investors it most definitely expects to benefit from the so-called ‘Trump bump’.
Rumours are that the new President could announce as much as a US$54bn hike in US defence spending later tonight, which would play very much into Meggitt’s hands, given that one of the areas it specialises in is defence.
The company lifted its full-year dividend today and added that, backed by Trump’s plans, it expects improved revenue growth in 2017.
Unfortunately whatever The Donald has to say later on, it will have next to no effect on Go Ahead Group PLC (LON:GOG), which slumped by almost 15% this morning.
The transport group has slashed its full-year expectations after its struggling rail business – which includes the much-maligned Southern Rail franchise – reported a 35% drop in first half operating profits.
To make things worse, the bus business that papered over the cracks in that period is also expected to come under pressure in the second half as passenger numbers continue to fall.
Moneysupermarket.com Group PLC (LON:MONY) was another that slipped this morning; losing 5% in early deals.
The company’s latest results showed margins reduced from 80% to 75%, while it also told investors that revenues for early 2017 are behind those seen last year.
Meanwhile in the small caps, Strategic Minerals PLC (LON:SML) rocketed higher as it reported a high cobalt content in re-worked assays at its Hanns Camp licence in Australia.
Cobalt is being mentioned in the same breath lithium in some quarters given its use, like the soft metal, in batteries for renewable energy storage and to power electric vehicles.
Lighthouse Group PLC (LON:LGT) was also flying the flag for the junior market and was up more than 10% after the financial adviser extended its existing range of funds from its wholly-owned subsidiary, Luceo Asset Management.
Likewise, SpaceandPeople Plc (LON:SAL) also enjoyed a decent run this morning and was trading 7% higher after it inked an exclusive deal with Primesight.
The tie-up will see SpaceandPeople promote brands and manage promotional space across Primesight’s airport portfolio in the UK.
8.15am...FTSE 100 just in the black, but miners take a tumble
It's not quite the onslaught that some had predicted, but the FTSE 100 is scratching away, albeit rather feebly, at Friday’s losses, with a surprise name dragging the index just into the black.
Marks and Spencer Group Plc (LON:MKS) continued its mini resurgence over the past week or so and was buoyed today by a bullish note from City broker Jefferies.
The UK retailer was up more than 2% this morning – the biggest riser on the FTSE 100 – helping the blue chip index to open 6 points higher at 7,259.
A host of the big miners were weighing on the FTSE 100 though, presumably ahead of Donald Trump’s speech later on tonight.
Randgold Resources Ltd (LON:RRS), Fresnillo PLC (LON:FRES), BHP Billiton plc (LON:BLT) and Antofagasta PLC (LON:ANTO) were all down 2% or more and made up four of the top five fallers on the FTSE 100 early on Tuesday.
7am...FTSE 100 seen higher after US, Asian gains; Trump speech awaited
The Footsie is expected to push higher in early deals following overnight gains from US and Asian markets with the main focus on Donald Trump’s first speech to Congress and hopes for news on the new president’s tax plans.
Spread betting firm CMC Markets expects the FTSE 100 index to open around 19 points higher, having added 9 points yesterday to close at 7,253.
Michael Hewson chief market analyst at CMC Markets UK, said: “Twelve in a row and counting as the Dow closed higher for yet another consecutive record close, as well as new record highs for both major US benchmarks, and this looks set to translate into a positive European open this morning.
“The catalyst was once again orchestrated by President Trump himself as he sketched out plans for spending large sums of money on infrastructure and defence spending, with the details likely to be fleshed out later today, after US markets close in his eagerly anticipated speech to a joint session of US lawmakers.”
He added: “While markets no doubt appear to like what they are hearing, the President now needs to deliver, he’s talked the talk and he now needs to walk the walk.”
Gold prices have been a beneficiary of the Trump focus recently, with the yellow metal currently trading near three month highs around US$1,250 an ounce, lifted by a relatively weak US dollar in which it is priced.
Results from precious metals group Fresnillo should show its fourth-quarter group revenues got a boost as average selling prices for both silver and gold should have risen compared to the previous year.
Meanwhile, fellow FTSE 100-listed firm Taylor Wimpey will continue the housebuilding sector's recent flow of numbers, although, once again, having given a detailed trading update in January few surprises are expected.
In a preview note, analysts at Peel Hunt are forecasting around a 20% increase in the housebuilder’s pre-tax profits to £728mln, with the forward order book at the start of January expected to stand at £1.7bn.
Other significant announcements expected on Tuesday include:
Finals: Bodycote PLC (LON:BOY), Croda International PLC (LON:CRDA), Elementis PLC (LON:ELM), GKN PLC (LON:GKN), Interserve PLC (LON:IRV), Johnson Service Group plc (LON:JSG), Laird PLC (LON:LRD), Moneysupermarket.com Group PLC (LON:MONY) Provident Financial PLC (LON:PFG), Sphere Medical Holdings PLC (LON:SPHR), St James’s Place PLC (LON:STJ), Tullow Oil plc (LON:TLW
Interims: Go-Ahead Group PLC (LON:GOG), Revolution Bars Group PLC (LON:RBG), Redde Plc (LON:REDD), Ricardo plc (LON: RCDO), Swallowfield plc (LON:SWL), Waterman Group PLC (LON:WTM)
Trading statements: Babcock International PLC (LON:BAB), OPG Power Ventures PLC (LON:OPG)
Around the markets:
- Sterling: US$1.2445, up down 0.02%
- Gold: US$1,253.60 an ounce, down 0.3%
- Brent crude: US$54.15 a barrel, up 0.2%
City Headlines:
- French blamed for scuppering London Stock Exchange merger – The Times
- Support services group set to put worker on its board – The Times
- Trinity Mirror seeking to bundle newspaper industry – Financial Times
- UK firms call for Brexit to be delayed if a trade deal isn’t struck – The Independent
- BMW considers making electric Mini outside U.K. due to Brexit worries – Daily Telegraph
- Warren Buffett reveals Apple stake of more than $18 billion – Financial Times
- GE’s Jeff Immelt urges Trump deregulation and tax reforms – Financial Times
- SpaceX plans to fly private astronauts round the moon – Financiasl Times
- Jones the Bootmaker owners hoist ‘for sale’ sign over retailer – Daily Telegraph
- B&M budget store Bosses pay themselves millions through tax havens, Daily Mail investigation reveals